49485 - WCS City

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Summary of Investment Information

Project Number

49485

Company Name

CITY BANK PLC

Date SPI Disclosed

Mar 26, 2024

Country

Bangladesh

Region

South Asia

Projected Board Date

Apr 23, 2024

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Nov 22, 2024

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Jul 15, 2024
Signed : Oct 31, 2024
Invested : Nov 20, 2024

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

The proposed project consists of a senior loan of up to US$50 million to City Bank PLC (“City Bank” or “Bank”) in Bangladesh with a tenor of two years and with an option to rollover for an additional two years for a maximum tenor of four years. The proceeds of the investment will be used to meet the bank's immediate liquidity needs and extend loans to eligible sub-borrowers (export/import-based SMEs as per IFC’s definition of targeted sectors) through its offshore banking units (OBU) to enable the Bank to continue to support key sectors of the Bangladeshi economy affected by COVID-19 and the subsequent global economic headwinds.

The Project will be supported by a pooled first loss guarantee of up to US$40 million provided by International Development Agency IDA Private Sector Window Blended Finance Facility (IDA-PSW BFF).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Financing Structure: The IFC loan is anticipated to provide the Bank, critical medium-tenor US$ liquidity support and enable it to support working capital and trade-related needs of their SME clients, particularly in sectors like RMG, cement, and agriculture. Through this project, IFC is offering medium tenor U.S. dollar (up to 4 years) funding as compared to other U.S. dollar facilities available in the market. The banks are reliant on mostly deposits for financing, which tend to be shorter tenor and in local currency. Medium to long term liquidity in U.S. dollar remains tight for the banks. Currently, more than 90 percent of the U.S. dollar financing that is available to Bangladeshi banks from foreign lenders is short-term with a tenor of approximately 6-9 months. Over the past 12 months, neither U.S. dollar-denominated syndicated loans nor U.S. dollar-denominated corporate bonds were issued by companies in Bangladesh at similar ratings.

E&S Category Rationale / Risks and Mitigation

The proposed project entails a senior loan to The City Bank exclusively for financing short term (up to 12 months tenor) working capital and trade finance loans to small and medium enterprises (SME). The Bank is involved in providing long and medium-term financing to corporates, and micro, small and medium enterprises by way of working capital, term loans, project and structured finance, and syndications. It also provides several short-term products as well as non-funded products like bank guarantees. SME sectors of exposure include readymade garment industry, textile and spinning mills, light engineering, plastic, paper, packaging and printing, pharmaceuticals industry, computers, electrical and electronics industry, and other trade and services sector. IFC’s loan will not be used to finance any activities in the Exclusion List, any coal related activities or higher risk activities that may include involuntary resettlement, risk of adverse impacts on Indigenous Peoples, significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, significant retrenchment, or significant occupational health and safety risks. Hence, the E&S risk of the proposed investment is medium, and the project is categorized as FI-2 according to IFC's Policy on Environmental and Social Sustainability. The applicable performance requirements will be i) the IFC- FI Exclusion List; and ii) the relevant national E&S laws and regulations. The bank will disclose a summary of its ESMS on its website.

The bank is implementing an environmental and social management system (ESMS) which aligns with the central bank’s Environmental and Social Risk Management guidelines of 2022 (https://www.bb.org.bd/mediaroom/circulars/gbcrd/jun262022sfd03e.pdf). The bank has recruited qualified environmental specialists responsible for E&S risk management. The ESMS includes guidance on exclusion list screening, E&S risk rating and categorization, E&S due-diligence including industry-specific checklists, and guidance on corrective actions plan, and risk-based monitoring of sub-borrower’s performance. The ESMS also requires application of IFC Performance Standards in high-risk project finance transactions. This existing ESMS is adequate to cover the E&S risks associated with the proposed IFC loan. The bank has also provided an external communications mechanism (ECM) platform to receive, process and manage third-party communication related to projects financed provided by the bank. The bank has adequate HR policies which are generally in line with IFC Performance Standard - 2 requirements.

Contacts

For Inquiries About the Project, Contact

City Bank PLC
Mahbub Jamil
Head of Structured Finance
+880258813483 Ext:1264
mahbub.jamil@thecitybank.com

www.citybankplc.com

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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